Gov't to launch 4 tln won fund to help struggling shipping lines

SEOUL, April 7 (Yonhap) -- The government will establish a fund worth up to 4 trillion won (US$3 billion) to purchase vessels from local shipping companies as they struggle with declining demand amid a protracted economic slump, officials said Tuesday.

According to the Ministry of Land, Transport and Maritime Affairs and the
Financial Services Commission, the government will approve the creation of the
fund and other measures during a meeting on Thursday to enhance the
competitiveness of the nation's shipping industry.
The fund will be used mostly to purchase ships from struggling local shipping
lines which have few options but to sell those assets at excessively cheap prices
to foreign investors in the face of a global economic slowdown.
The state-run debt clearer Korea Asset Management Corp., credit banks and private
investors will participate in setting up the fund, officials added.
The move comes as local shippers have been feeling the pinch of the global
financial crisis and the slumping economy, with some facing a severe liquidity
squeeze.
Experts have warned that a possible bankruptcy chain reaction will undermine the
soundness of the shipbuilding and banking sectors, dealing a harsh blow to the
whole economy.